US soybean exports drop by 97 percent as trade deficit with China grows

U.S. soybean exports have dropped off 97 percent in 2018 compared to the same period in 2017.

What happened?

In the first seven weeks of the 2018-19 marketing year, the American Farm Bureau Federation (citing USDA data) reported that the U.S. exported roughly 7.4 million bushels of soybeans to China. During the same time period last year, the U.S. exported 239 million bushels. Soybean exports from the U.S. to China in the past week fell even further — to zero.

The American Farm Bureau Federation blamed the drop on Chinese retaliatory tariffs of 28 percent on imports of soybeans from the United States. China announced the soybean tariffs, as well as tariffs on corn, beef, whiskey, propane, and automobiles, in April as part of a second round of retaliatory tariffs in response to protectionist tariffs imposed by the Trump administration on all imports of steel and aluminum to the United States.

In July, the Trump administration announced that it would be extending $12 billion in emergency aid to farmers hurt by tariffs.

What is the trend on trade deficits?

According to the U.S. Census Bureau, for the first eight months of 2018, the only months for which there is data so far, the U.S. trade deficit with China ($261.1 billion) has increased from what it was over the same time period in 2017 ($239.7 billion), which in turn had increased over the same time period in 2016 ($225 billion). The 2016 deficit was actually lower than the deficit in 2015 ($238.9 billion).

The trade deficit with China for all 12 months of last year was $375 billion. The overall trade deficit that the U.S. has with all countries increased from $736.6 billion in 2016 to $795.7 billion in 2017. For the first eight months of 2018, the overall trade deficit ($565.6 billion) is already more than $40 billion greater than it was during the same time period in 2017 ($520.9 billion).

What is a trade deficit?

President Donald Trump has repeatedly cited U.S. trade deficits with other nations as a reason for imposing tariffs.

Trade deficits occur when a nation imports more than it exports. Economists are split on whether or not this is actually a bad thing, since more importing could be an indicator of a healthy economy and consumers with more disposable income.

However, it can also be an indicator of falling exports. For the month of August, U.S. exports to China fell from $10.8 billion in 2017 to $9.3 billion in 2018 — a drop of $1.5 billion. 

What else?

Sen. Heidi Heitkamp (D-N.D.) tweeted that this was “an unfolding disaster for North Dakota soybean farmers” and placed the blame squarely on Trump's tariffs. Heitkamp is currently running for re-election, and is 14 points behind her Republican challenger, according to RealClearPolitics.

For his part, speaking to the Wall Street Journal on Wednesday, Trump denied that his tariffs were causing harm, and seemed to imply that they didn't even exist.

“We don’t even have tariffs,” he said. “I’m using tariffs to negotiate.”